If you have money its easy to get tempted to buy a home. After all buying a home is a great financial achievement. It boosts your ego, increases self confidence and you belong to the group of “home-owners” rather than “home-renters”.
Owing a home is great but remember this is the most important decision of your financial life. If your decision is good, that’s fine. But if somehow it turns out to be a bad one, you may end up regretting this decision throughout your life. It will bring down your quality of life too.
Recently we discussed why you should buy what you need and not what you want. Read it to know why every buying decision you take should be governed by your needs not wants. First of all if your are absolutely sure you want to buy a home, you have the money to pay as down-payment and you are comfortable paying the loan installments for the next 5, 10, 15, 20 or may be in some cases 30 years, then fine – do the math – and go buy a home. However if you are not comfortable with buying a home – your finances are of no help – don’t worry many people are like you – go rent a home. Again rent a home according to your needs and not according to your wants. You may get a huge beautiful home for 500 dollars extra a month, but what’s the point if you are using only a part of that home? If you really need a big home, your family is big, then rent a big home else go for the one that will be enough for your family.
Ok now coming back to the topic of this article. Suppose you get a great job in a good city. It’s a permanent job. You are sure you are going to spend a considerable amount of time living in this great city, say probably the rest of your life. You have money to give as down-payment to buy a home. Therefore you decide that you will buy a home as soon as land in the city. WRONG DECISION!!!
WHY? Lets discuss.
One of our friends was posted to Michigan U.S.A, and within a month of being there he bought a nice looking apartment. He got it at the right price so he was happy. However a few months passed by. And then he realized that he was not very comfortable in that part of city. People living in his neighborhood and surrounding areas were not he could be easily be friendly with. He was not happy with the infrastructure there as well. When he began to know the city better he found out that there was an area some 10 miles away from where he was staying, perfect for living. He would have been more comfortable living there instead of the place he was right now. Poor fellow had to sell his home at a loss and buy another (smaller) flat in his preferred location.
What is the moral of the story?
Its that know the city well before you buy a home. If you are new in a city and want to buy a home, first rent for at least a year. Know the city pretty well before you take the decision to buy a home.
It will save you a from lot of headache.
However this tip stands good if you are new in the city and don’t know much about the city where you want to buy a home. However if you are staying in the city for a long time, say with your parents, then you can straight away buy a home.